When you need funds urgently, personal loans and credit cards are two common options. But which one is cheaper? The answer depends on how you plan to use the money and repay it.
Personal Loans
Interest rate: 10% to 24% per annum
Processing fee: 1-3% of loan amount
Tenure: 1 to 5 years
EMI: Fixed monthly payments
Prepayment: 2-5% penalty typically
Credit Cards
Interest rate: 24% to 48% per annum (on revolving credit)
Interest-free period: Up to 45-50 days if paid in full
Annual fee: ₹500 to ₹5,000+ for premium cards
Late payment fee: ₹500 to ₹1,000+
Balance transfer: 1-2% fee, lower interest for 6-12 months
Cost Comparison: Borrowing ₹1 Lakh for 1 Year
When to Choose Personal Loan
- •Large expenses (₹50,000+) that you can't repay in 1-2 months
- •Debt consolidation
- •Medical emergencies
- •Home renovation
When to Choose Credit Card
- •Small expenses you can repay within the interest-free period
- •Getting rewards and cashback
- •Emergency backup funding
- •Building credit history
Use our Personal Loan EMI Calculator to calculate exact EMIs. Compare with our EMI Calculator for different loan amounts.
Smart Borrowing Tips
1. Always pay credit card bills in full before due date
2. Choose personal loan over credit card for amounts above ₹25,000
3. Check your credit score before applying (above 750 is ideal)
4. Compare at least 3 lenders before choosing
5. Read the fine print for hidden charges
Calculate your borrowing costs with our Personal Loan EMI Calculator and EMI Calculator.
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Written by
CalcBit Editorial Team